How Many Lives Can $150 Million Transform?

“Well, you have a $2 million business—let’s think about what you could do if you were a $50 million business.”

Imagine this scenario: You’ve built a successful business or two, and you’ve decided to use your experience for good by volunteering in Ghana. But rather than paint houses for a few weeks, you stay for an entire year, helping local business owners grow their companies and turn them into wellsprings of social good.

In November 2011, the Stanford Graduate School of Business (GSB) launched the Stanford Institute for Innovation in Developing Economies, where the scenario above is actually a reality. The institute, widely known as SEED, has an ambitious and elusive goal: transforming the lives of people in poverty. SEED was launched by a $150 million donation in November of 2011 from Robert King, a 1960 Stanford Business School alumnus, and his wife, Dorothy. It’s the largest donation the business school has ever received.

Well-funded or otherwise, countless organizations have thrown themselves into the fight against poverty. Extreme poverty has gone down in the past two decades, but it clings stubbornly to many parts of the world. More than a billion people still live on less than $1.25 a day.

SEED Executive Director Tralance Addy acknowledges that he’s far from the first person to join the battle. “Somebody told me a long while ago that there’s about one NGO for a thousand people in India,” he says, laughing incredulously. “It’s infinite.” That’s why Addy is determined to do things differently. “The only reason to bother is that it’s going to be big,” he says. “You cannot do this on the edges and say, ‘Well, you know, we have this institute and it did something for poor people.’ It doesn’t make any sense—you should take your money and go do something else. If we are getting involved, it has to have the kind of impact that is meaningful.”

Though the institute’s two-year anniversary just passed, the question remains: How much of a dent will SEED make? Will it do the $150 million donation justice?

Tralance Addy is the executive director of SEED.

“I’m not using the buzzwords of the old corporate social responsibility”

Addy hasn’t outlined a specific budget; he says the institute has underspent so far, and that it “could probably spend ten million dollars a year for a while” based on the growth of the endowment, matching funds, and other anticipated gifts. So far, that budget has covered a number of key areas. On July 18, SEED opened its first center in Accra, Ghana. There, 28 companies from Ghana, Nigeria, Senegal, Sierra Leone, and Côte d’Ivoire—with yearly revenues between $500,000 and $1 million, for the most part—are going through something called the Transformation Program. Later this year, SEED is planning to open its second center in Nairobi, Kenya, “pending additional due diligence on security and a few other issues,” Addy says. There are 20-something people on payroll, he estimates, and there are five volunteer business coaches working in Ghana.

Jesper B. Sørensen, the faculty director of SEED, feels good about the pace of things—especially in Ghana. “For a university used to operating in the comfort of Silicon Valley, this posed an incredible array of challenges, and I am extremely proud of the way our staff met the challenge,” he says. “There is still a lot of work to do, but I am confident that the lessons we have learned will be put to good use.”

It’s worth looking at the institute’s unusual philosophy, too. To his favor, Addy’s resume shows him to be well-equipped to lead it. His academic credentials are solid: He has a Ph.D in biomechanical engineering, and he has completed the Advanced Management Program at Harvard Business School. He’s been president of a division of Johnson & Johnson and CEO of WaterHealth International (among other roles), so he’s traveled widely in the developing world. Perhaps more importantly, though, Addy grew up in Ghana. “It may be more romantic for me to claim that I was [destitute], but I don’t think I was,” he says. “I don’t think these days I would qualify. But we didn’t have a lot of money.” Both Addy’s professional and personal lives have shaped his idea of what it means to fight poverty—and it’s refreshingly simple. “I look at the issues of poverty as sort of a result of what you could do if you solved certain problems,” Addy explains. “Rather than go at it and say, ‘Well, these people are poor, I’m going to make them un-poor,’ it’s more of a question of, ‘What problems do poor people face?’” (“I’m not using the buzzwords of the old corporate social responsibility and saying, ‘Triple bottom line,’” he later deadpanned. “I don’t care.”)

SEED also stands out because it’s housed in a business school. The fact that the GSB received the largest gift in the business school’s history seems ironic, but Addy contends that it makes perfect sense. He believes charity exists to prime the pump rather than keep it going. “I don’t think that there’s precedent anywhere that masses of people have been elevated from poverty without the combination of business playing a role,” he says.

At the center in Ghana, professors and volunteers are currently sprinkling Stanford’s innovation-flecked fairy dust over the businesses they work with, encouraging owners and entrepreneurs to build enterprises that yield profits while bettering the lives of the people around them. “You have to do the kinds of things that allow people to look at the surroundings around them and say, ‘Here’s a problem, I think I can solve it’—not a powerless person who can’t solve it,” Addy says. “That’s a mindset shift kind of thing. It’s not easy. It’s not a business. It’s an attitude about life and what we can do with it.”